The 3 Bid Process For All Repairs And Purchases: Is That Eventually A Fail For The Client?

This is what blanket purchase orders and management approvals are for.  You bid and qualify the vendor and set an annual PO in place for service with a limit.   Anything over a specific dollar amount has a management authority spend limit.  IMHO

Companies and government agencies that have competitive bid processes usually start off with good intentions, but often drive away qualified suppliers and service providers because their process is so difficult to work with. The goal is to get multiple bids so that the buyer can see that the prices being paid are reasonable and the customer is not being grossly overcharged. But this sometimes backfires when the majority of suppliers refuse to participate in the bid process, leaving the customer with bids from unqualified suppliers and/or bids that are greatly inflated.

The $500 limit for purchases/repairs is extremely low in the year 2019; most customers have limits of $2,500, $5,000, or even $10,000 before competitive bidding requirements come into play.

For service and upgrades, many customers issue blanket contracts for a given period (usually one year) for all work of a certain type that falls below a certain dollar value. This contract is sometimes called an "On-Call Services Contract" or "IDIQ (indefinite delivery/indefinite quantity) Contract". This contract is put out to bid annually, and is a awarded to a single contractor for the duration of the contract period.

For example, one company I work with has a large campus access control system with hundreds of card reader doors. This system needs maintenance and doors are constantly being moved or added to the system. I helped this client to write an RFP for a multi-year On-Call Services Contract. This contract was awarded to a single integrator who gets all access control system work for the duration of the contract term without the need to submit additional bids. This contract is worth hundreds of thousands of dollars a year.

I am on both sides of the competitive bidding equation: I help clients to write RFPs and solicit proposals from contractors; and I submit proposals myself when I respond to RFPs for consulting services. The process can be time-consuming and often frustrating. Because of this many companies refuse to respond to RFPs and will only do negotiated work with customers. However, there are other companies who have learned to successfully navigate the RFP process and do a majority of the business doing this type of work. 

When encountering a prospect that appears to be totally screwed up and doesn't seem to know what they want, the first instinct is to turn and run away. However, I have found that this type of customer is often the type that most needs our help. If we can work through the difficulty, there is often the basis for a profitable and long-lasting relationship. 

This is another reason for the federal government why toilet seats and hammers are so expensive!!

The University I work for has a rule that we must invite at least 3 bidders for an unadvertised small job. There is no requirement that they all respond. Large jobs (100K+) go through a more formal process requiring an advertisement solicitation -- but that is not what this thread is about.

Presumably, this is in the public domain. If it is, there are procurement policies that are publicly accessible. It is surprising how little the folks at the departmental level actually don't know the policy. I have four or five occasions where the client was way off on a public procurement policy. Maybe you should check into it... its public.